Price gains for apartments are beating those for houses in a growing number of suburbs around the country, as worsening affordability and a lack of stock push buyers back into high-rise living.
Analysis by CoreLogic found that in more than 190 suburbs around the country, apartments have exceeded house price growth, with the most affluent areas posting the sharpest gains. Overall, however, detached housing prices have outperformed the unit markets for well over a year.
Apartment values in East Melbourne have exceeded house price growth in the past 12 months.
In East Melbourne, unit prices jumped by 14.4 per cent in the past 12 months, compared with a drop of 8.6 per cent in house prices, data from CoreLogic shows. The gap between house and apartment prices currently sits at $1,627,077 or 33 per cent.
In Albert Park, the median unit price climbed by 4.9 per cent, but the median house price fell by 6.4 per cent over the same period, as the gap between house and apartment prices widened to around 41 per cent.
Apartments in Perth inner suburb Leederville also eclipsed house performance over the past 12 months. Apartments posted price growth of 9.7 per cent, compared with 1.7 per cent for houses. The gap in prices ballooned to about 50 per cent during the same period.
Eliza Owen, CoreLogic Australia head of research, said one of the major factors fuelling the acceleration in unit values relative to houses is the worsening affordability constraints in the detached housing segment.
“Across the capital city markets, houses are on average 52.2 per cent higher than unit values,” she said.
“Across the suburbs featured in this analysis, the average difference between house and unit values was 98.8 per cent, suggesting demand may be accelerating in a more affordable part of the market.
“This may be particularly true of desirable areas, where location is important enough to buyers that they are willing to live in apartment spaces over detached houses and units.”
Ray White chief economist Nerida Conisbee said the strong growth in the upper end indicated strong owner-occupier activity rather than investors.
“We are seeing apartment price growth most apparent at the premium end, partly because owner-occupiers tend to buy more expensive apartments than investors,” she said.
“Also, there does seem to be a lot of downsizers taking advantage of market conditions – getting a massive price for the big family home and moving into a high-quality apartment.”
New developments could also push prices up for apartments by increasing the quality of stock, said Kent Lardner, director of Suburbtrends.
“Apartment asking prices can often increase through time simply due to the release of new and more expensive properties,” he said.
“Another consideration is being driven hard by reduced supply. Several apartment markets across Australia have shown an increase in demand relative to supply and price rises that appear to be trending well into the next 12 months.”
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